Brent received a dope from the dollar

Quotations of futures for the North Sea oil grade have risen to the maximum since early July amid a weakening of the US dollar, a breakthrough in the NAFTA negotiations, an increase in global appetite for risk and a reduction in OPEC production. For a long time, investors could not answer the questions, could the cartel cover the emerging deficit in connection with economic sanctions against Iran and how deep will the influence of trade wars on global demand for black gold? The reality was not as frightening as it could be supposed, and the "bulls" for Brent and WTI took up the job with renewed vigor.

Donald Trump calls for reducing Iranian exports to zero in connection with discontent over the implementation of the anti-nuclear program of Tehran. As a result, the latter was forced to reduce production from 3.09 million b / s in April to 2.06 million b / s in August. The buyers were blown away by the wind, despite the fact that local oil prices were the most serious since 2004. The problem is that sanctions against Iran are a bullish factor for black gold, and to reduce its impact on prices, the US administration is ready to sell strategic reserves and appeals to OPEC assistance. The cartel is reviewing its program to reduce production by 1.8 million b / s and is allegedly ready to cut the size of the cut, but in fact, it does not. Moreover, the Monitoring Committee made adjustments to the previous statistics. OPEC in May exceeded its obligations by 147%, in June, by 120%. He must actively increase production in order to reduce the deficit. This does not happen, which leads to higher prices.

The correction of Brent and WTI from mid-June to mid-August contributed to the US dollar, which strengthened against the background of trade wars and the tightening of the monetary policy of the Fed.

Dynamics of Brent and USD index

analytics5b853897d592d.png

At the end of summer, the situation changed. Donald Trump's dissatisfaction with the monetary policy pursued by the Federal Reserve gave grounds for rumors about a slowdown in the normalization process, which forced speculators to fix profit on the dollar. At the same time, a breakthrough in the negotiations between the United States and Mexico gives hope that the owner of the White House can be reached. Including China, the largest consumer of oil, whose economy is slowing down. So, the demand for black gold is also potentially slowing down. In fact, the return of independent processors from summer holidays led to an increase in oil imports in the Middle Kingdom by 1.4 million b / s compared to July to 6 million b / s. If there are no problems on the demand side, and the supply dynamics allows us to talk about the "bullish" market conditions, then why Brent should not aim at renewing the May high?

Technically, after an unsuccessful test of important support at $ 71.35-71.9 per barrel, the bears signed their own weakness. The initiative moved to the "bulls", which activated the pattern of the "Shark" and moved quotations in the direction of its target by 88.6% and 113%. They correspond to $ 78.5 and $ 80.8.

Brent, the daily chartanalytics5b8538aace412.png

The material has been provided by InstaForex Company - www.instaforex.com

USD / CAD: Southern trend depends on Canada's "pliability"

After a long period of pessimism and panic sentiment, cautious optimism is gradually returning to the foreign exchange market. Of course, at the moment, it's too early to talk about any stability but a string of negative news has been replaced by more or less encouraging developments. All this exerts background pressure on the US dollar, which until recently enjoyed the status of a protective tool.

The main event of yesterday was the conclusion of a trade deal between the US and Mexico. This is the result of a long negotiation process, which was originally conceived to restart the North American Free Trade Agreement (NAFTA). However, Trump early in the summer initiated the creation of two separate contracts, with Canada and Mexico. Despite the fact that both countries rejected this proposal, representatives of the Mexican side during the past two months held bilateral talks with Washington. This dialogue ended successfully, although trilateral negotiations unsuccessfully lasted more than a year. Trump in the Oval Office made a public statement, indicating the mutually beneficial nature of the transaction, adding that the parties would renounce the name "NAFTA".

analytics5b84fa84340c9.jpg

The Canadian dollar paired with the US currency initially reacted positively to this fact, breaking through the 30th figure and updating the multi-month lows (yesterday's low at 1.2950). This reaction was expected, because Mexico (and the US) does not abandon the trilateral format of the agreement, and now Ottawa can join the concluded deal. But already today, traders of the pair USD / CAD have replaced enthusiastic optimism for cautious pessimism.

The fact is that the comments of the Canadian side were extremely restrained, a representative of the Canadian Foreign Ministry said that the country would agree to a deal only on terms that are advantageous for itself. This position Ottawa has maintained for the past year, while Trump considers favorable conditions for Canada unfair for the United States. It is unlikely that the Canadian side will radically change its mind, while the States "play long", taking a wait-and-see attitude. On the other hand, Prime Minister of Canada Justin Trudeau yesterday in a conversation with the President of Mexico agreed with the trilateral format of the deal, for which already today the Canadian Foreign Minister arrived in Washington for talks. Than they will be crowned, it is not known, but, given the multi-month prehistory of this issue, there is not much chance of a breakthrough.

For this reason, the Canadian dollar pushed away from yesterday's low and is still stuck in the flat. If Canada approves the proposed role in the trilateral transaction, it will be a clear breakthrough that will give the Canadians strong support throughout the market. After all, we must not forget that the Bank of Canada is on the path to normalizing monetary policy, and the latest releases of macroeconomic statistics have demonstrated the growth of Canadian inflation and the reduction of unemployment against the backdrop of rising oil prices. Therefore, the role of the trade deal with the US in this context is of great importance: it will allow the Canadian regulator to raise the rate again this year and consider a similar scenario for the next year.

Thus, the further movement of USD / CAD in many respects depends on the outcomes of the American-Canadian negotiations. The development of the southern trend is quite likely, especially as the US dollar index falls. This indicator continues to be within 94 points against the background of a change in the general fundamental background. The market was inspired by yesterday's agreements and "quiet" talks between Washington and China. Donald Trump, by the way, recently confirmed that the Chinese initiated a further dialogue. And although the president was skeptical about this idea, at the same time he expressed confidence that sooner or later the parties will manage to come to an agreement. Against the background of other events, this rhetoric also had a definite impact on the market.

Now, a few words about the technique of USD / CAD. In general, the technical picture has not changed since yesterday, the pair has only reached the lower limit of the price range, somewhat "broadening" it. On the daily chart, the price is still between the middle and bottom lines of the Bollinger Bands indicator and under all lines of the indicator Ichimoku Kinko Hyo, which formed a bearish signal "Line Parade".

analytics5b84fa768e577.jpg

Yesterday's low of 1.2950 is not a support level. They are the bottom line Bollinger Bands on D1, which now corresponds to the level of 1.2935. This target is the nearby goal of the southern movement, but at the same time, an intermediate barrier. The main goal is below, namely in the area of the 28th figure. If the pair secures in this price range, bears will open their own way for a larger decline. However, much depends on the fundamental background, namely the prospects for Canada's participation in the new trade agreement.

The material has been provided by InstaForex Company - www.instaforex.com

Analysis of EUR / USD Divergences on August 28. The Euro-currency continues to lead

4h

analytics5b84ecc70ab02.png

The currency pair EUR / USD on the 4-hour chart made a return to the correction level of 61.8% - 1.1605 after the formation of the bearish divergence of the MACD indicator. Quit of quotes from the level of Fibo 61.8% worked in favor of the European currency and the resumption of growth. As a result, on August 28, the growth process can be continued in the direction of the corrective level of 100.0% - 1.1791. The consolidation of the pair's rate under the Fibo level of 76.4% can be interpreted as a reversal in favor of the US dollar and expect a slight drop towards the correction level of 61.8%.

The Fibo grid is built on extremes from July 9, 2018 and August 15, 2018.

Daily

analytics5b84eccf86492.png

On the 24-hour chart, the pair completed the closing above the correction level of 100.0% - 1.1553. As a result, the pair's growth continues in the direction of the next correction level of 76.4% - 1.1789. Today, there is no visible divergence in any indicator. The retracement of the rate from the Fibo level of 76.4% will allow traders to count on a reversal in favor of the US currency and a slight drop towards the correction level of 100.0% - 1.1553. The consolidation of quotes under the Fibo level of 100.0% will similarly work in favor of the beginning of the fall of the pair.

The Fibo grid is built on extremes from November 7, 2017, and February 16, 2018.

Recommendations for traders:

Purchases of the EUR / USD pair can now be carried out with a target of 1,1791 with a stop loss order under the Fibo level of 76.4%, since the pair completed the closing above the correction level of 1.1675.

Sales of the EUR / USD pair will be possible with the target of 1,1605 if the pair completes the closing under the Fibo level of 76.4%, with a Stop Loss order above 1.1675.

The material has been provided by InstaForex Company - www.instaforex.com

Positive in the market, negative for the dollar

News on the achievement of the free trade agreement (NAFTA) between the US and Mexico on Monday stirred up financial markets, raising the demand for risky assets, while exerting pressure on the US dollar.

The statement of D. Trump that the US agreed on terms of trade with Mexico within the framework of the updated free trade agreement (NAFTA), provided good support to the mood of investors in world markets. Bidders perceived this news as a possible forerunner of future agreements already between the States and Canada and, what's more, do not joke with China. Stock markets in Europe and the US closed in green, and the trading session in the PRC and in Asia as a whole also took place on a positive note.

On this wave, the demand for risky assets - shares of companies and commodity-raw assets - increased. But the US dollar has somewhat passed in relation to the major currencies, which can be explained by a decrease in the interest of market players in defensive assets. By the way, the yields of government bonds of the US Treasury have also grown. So, the profitability of the 10-year Treasury benchmark rose to 2.884% from 2.846%.

And here the question arises. And is it worth expecting further demand for risky assets and a local weakening of the dollar rate?

In our view, the agreement between the US and Mexico is positive, but it does not solve the main problem - the growth of risk for the world economy. And it is precisely in the trade relations between China and the States, an agreement between which has not been achieved. Therefore, in our opinion, if this most important agreement is not reached, then the markets will again fall into pessimism, and the rate of the American currency will be supported by the function of a currency-refuge.

Estimating the overall prospects for the dollar's movement on the market, we believe that the overall lateral dynamics in the market of currency pairs with the US dollar will continue in the near future, although, of course, speculators will try to sell it on any small positive.

Forecast of the day:

The pair USD / CAD is trading above the level of 1.2955. It has the potential of a local decline to 1.2900 after the crossing of this mark on the wave of rising crude oil prices, as well as the revived hopes that the US and Canada can agree on terms of mutual trade.

The pair USD / JPY is trading in the range of 110.95-111.50 against the backdrop of conflicting signals, which do not allow it to grow or fall. But the balance of the negative is still likely to prevail, so we consider it possible to sell the pair on growth, from about 111.50 to 110.95.

analytics5b84ed71d5aaf.png

analytics5b84ed84f41ef.png

The material has been provided by InstaForex Company - www.instaforex.com

Forecast for GBP / USD as of August 28, 2018

GBP / USD

The British pound surprisingly stubbornly resists the weakening of the dollar. Against the background of yesterday's fall of the dollar index by 0.40% and the growth of the euro by 56 points, the pound added only 44 points. However, in the UK yesterday was a day off, a national holiday. Nevertheless, the price went above the Kruzenshtern trend line, moving to the upper border of the price channel (1.2960 and, of course, it's a nested line in a higher-level channel).

analytics5b84d312f262b.png

The outlook for further growth of the pound is currently weaker than that of the euro; the Marlin signal line has not yet passed into the growth zone, there is no actual price fixing over the Kruzenshtern line, even on the four-hour chart, Marlin remains in a negative trend. The growth of the pound may continue after overcoming the price of the high of yesterday. The first target 1.2960 is actually already open, overcoming it will allow to take the level of 1.3102 as the next target, this is the minimum of July 13 and June 21.

analytics5b84d324a6fa2.png

On the four-hour chart, the price is trying to push the support of the balance line. The fastening under it can drop the quotation to support the Kruzenshtern line (1.2794). But the growth scenario has a little more probability.

The material has been provided by InstaForex Company - www.instaforex.com

Control zones of EUR / JPY as of August 28, 2018

Throughout the second half of the month, a strong impulse model is formed. The pair has already exceeded the average monthly rate, which indicates an increase in the likelihood of a large supply.

The growth of the last days speaks of the strength of the upward movement, since corrective declines are practically absent. Yesterday, the pair went beyond the monthly short-term fault of August and consolidated there. This indicates a high probability of a change in priority in the long term. It should be taken into account that going beyond the zone also makes it possible to consider returning to its limits with a probability of 90%. According to statistics, further growth will be possible after more favorable prices for the purchase of the instrument are received.

analytics5b84aa8ab35d2.png

As the pair yesterday consolidated above the NCP 1/2 129.55-129.44, the probability of continuing growth to the weekly short-term order 131.11-13-.93 is 70%. Therefore, keeping some purchases to this zone makes sense. The main long position should be either closed, or transferred to a breakeven.

An alternative model, to date, is more likely. To implement, it requires the absorption of yesterday's growth and the closing of trading below the opening level. It is desirable that the closure of the US session occurred below the NCP 1/2 128.58-128.44. This will indicate the emergence of a large seller, which will allow the pair to stay below the monthly short-term fault. While this reversal model is not realized, it is unprofitable to look for sales.

analytics5b84abc680739.png


The daily short-term fault is the daytime control zone. The zone formed by important data from the futures market, which change several times a year.

The weekly short-term fault is the weekly control zone. The zone formed by important futures market marks, which change several times a year.

The monthly short-term fault is the monthly control zone. The zone, which is a reflection of the average volatility over the past year.

The material has been provided by InstaForex Company - www.instaforex.com

"The Australian" stumbled on politics

Do not dig a hole for another, you will get into it yourself. Malcolm Turnbull, who replaced Tony Abbott as prime minister in 2015, is now forced to resign himself. Ex-Treasurer Scott Morrison will take his place. This is the sixth chapter of the cabinet of ministers for the last 10 years, which allows us to talk about an extremely dangerous political landscape. Italy, with its Eurosceptic victory in parliamentary elections, did not stand side by side, but if one digs deeper, it becomes clear that the impact of events on the peninsula is more weighty than on the Green Continent. Hence the roller coaster on AUD / USD.

In the case of Italy, we are talking about the potential exit of the republic from the eurozone, which can destroy the currency block as a house of cards. The previous leadership is blamed for huge debts and sluggish economic growth. In Australia, everything is different. The change of the Prime Minister was due to behind-the-scenes games within the ruling Liberal Party. The green continent has been living without recession for 27 years, unemployment is steadily falling to the 5% level, which the RBA calls a full-time job, GDP is pleasing to the eye. The political crisis brought only a spoonful of tar into the barrel of honey, while the main drivers of the Australian dollar's quotations change are the global appetite for risk, commodity markets, trade wars and differential interest rates.

The fact that the Reserve Bank does not intend to begin the cycle of monetary policy normalization, at least until the second half of 2019, while the Fed continues to move towards a neutral interest rate (2.5-3%), ensures the growth of the yield differential between US and Australian bonds . He creates a solid foundation for the "bearish" trend for AUD / USD. At the same time, Jerome Powell's speech at Jackson Hole lowered the likelihood of an aggressive monetary restriction of the Fed and allowed the bulls on AUD / USD to lick their wounds.

Dynamics of the yield of US and Australian bonds

analytics5b83dd4cdc9fa.png

Despite the resumption of talks between Beijing and Washington, it is not necessary to talk about a breakthrough. The probability of a compromise is extremely low, and the States, after exchanging import duties for $ 50 billion, are preparing a new package of $ 200 billion. The trade wars contribute to the slowdown of the Celestial economy, whose role for Australia is difficult to overestimate. At the same time, the intention of the People's Bank to return to the practice of the daily adjustment of the renminbi in January, which is canceled in January, confirms that PBOC is interested in preventing the growth of USD / CNY above the psychologically important level of 7.

The strength of the US economy, the growth of corporate profits of US companies, the tenacious reluctance of the yield of 10-year Treasuries to exceed 3% and the slow normalization of the monetary policy of the FRS strengthen the global appetite for risk and thus support bulls for AUD / USD. In my opinion, many components of the external background unfavorable for the "lazy" are already largely taken into account in its quotes, which creates the ground for stabilization of the analyzed pair.

Technically, only the return of AUD / USD to the middle of the previous consolidation range 0.732-0.7465 and the successful storming of the upper boundary of the downward trade channel will allow the bulls to continue on their way to the north.

AUD / USD, daily chart

analytics5b83dd5993208.png

The material has been provided by InstaForex Company - www.instaforex.com

EUR / USD Daily. Prospects for the development of the movement in September 2018. Analysis of APLs & ZUP

Minor (Daily)

Euro vs US Dollar

Previous review of August 2, 2018 15:49 UTC + 3.

____________________

After the callback from the median line Median Line Minor (support level 1.3101), the EUR / USD instrument price was within the range:

-> resistance level 1.1700 (the lower limit of the channel is 1/2 Median Line Minute);

-> support level 1.1580 (upper limit ISL38.2 of the equilibrium zone of forks of operating scale Minor).

Accordingly, further development of the EUR / USD movement will be due to the direction of breakdown of the specified range.

____________________

buy)

Breakdown of the resistance level 1.1700 -> the development of the EUR / USD movement will continue within the limits of the channels 1/2 of the Median Line forks of operational scales -> Minute (1.1700 <-> 1.1830 <-> 1.1960) and Minor (1.1830 <-> 1.2030 <-> 1.2245 ).

The details are shown in the graph.

____________________

The outlook for the development of the downward movement (sell)

The breakdown of the support level 1.1580 (ISL38.2 Minor) -> the development of the EUR / USD movement will again proceed within the limits of the equilibrium zone (1.1580 <-> 1.1305 <-> 1.1020) of Minor operating scale forks.

See the schedule for details.

____________________

The review is made without taking into account the news background and is not a guide to action (placing orders "sell" or "buy").

analytics5b83eddc6a816.jpg

The material has been provided by InstaForex Company - www.instaforex.com

Trading plan 08/27/2018

Trading plan 08/27/2018

The general picture: There are more questions than answers.

The market was very much waiting for the Fed summit in Jackson Hole. However, the expectations were not met, and quite unexpectedly, the summit was ignored by the heads of the world's largest after the Fed, there was no ECB and the Bank of Japan. Consequently, the issue of coordinated policy has hung in the air. Moreover, the EU and the ECB are actively discussing the creation of an independent US bank transfer system. Apparently, this is due to the US-EU disagreements over Iran.

The second open question is the US-China trade war. The next portion of the US duties against China came into force. At the same time, US-China talks on trade were held in the US at a low level. There are no reports in the media about the breakthrough, most likely, there is no progress. The question is open.

Last week was closed under the sign of a decline in the dollar, to European currencies. The yen, at the same time, is trying to decline towards the dollar.

Fed Chairman Powell confirmed in Jackson Hole the Fed's continued commitment to a slow increase in the Fed's rate to prevent the economy from overheating (note that the first US GDP data for the 2nd quarter showed not only a strong GDP growth of 4.1%, but also an increase in GDP deflator inflation to + 3%, and earlier many years, the Fed believed normal inflation was 2.5-3.0%, not higher - that is, the Fed is about to switch to inflation control).

On Thursday there will be fresh data on inflation of the RFE.

Pound: We buy at the breakthrough level of 1.2890, upward.

Sales are possible at the breakthrough level of 1.2799, down.

analytics5b83ac94add96.jpg

The material has been provided by InstaForex Company - www.instaforex.com

Powell vs Strong Dollar

The main public idea behind Trump's tax reform was the repatriation of capital and the improvement of competitive conditions for producers in the United States. The same goal is pursued by trade wars, with the main trading partners of the United States (China, the European Union, Canada and Mexico) building a new tariff system designed to make imports less profitable and own production more profitable.

However, reality is far from being calculated. We have already noted both the weak growth rates of industrial production, and the rather alarming reports of the regional offices of the Federal Reserve, reporting on the slowdown in business activity. We add here the reluctance of foreign capital to participate in the financing of reforms, which is indicated by a decrease in purchases on the stock market in the past few months and the withdrawal from the treasures of a number of countries.

The report on orders for durable goods, published on Friday, confirms a negative trend. Orders decreased in July by 1.7%, this is the most significant decrease in the last 6 months, the largest losses in transport and military orders.

analytics5b839f9885167.png

It can be argued that until the tax reform has not given a visible positive result, however, the negative consequences are no longer behind the mountain. First of all, it is about the growth of the budget deficit from the decrease in tax revenues and the growing problems of exporters from the growth of the dollar. The Budget Committee of the Congress recently warned about higher growth rates of the budget deficit, and together with the lack of any desire of companies to participate in the re-industrialization program, which prefer to direct additional revenues not to the real sector, but to the growth of capitalization through the repurchase of shares, all this becomes serious problem.

It is no coincidence that Trump criticized the Fed's policy last week, which contributes to the growth of the dollar index in the absence of real results of reforms, making them increasingly problematic. Fed Chairman Powell, speaking at a symposium in Jackson Hole, partially agreed with Trump's criticism, and his speech contributed to a rapid decline in the dollar.

Powell, in particular, drew attention to the fact that the growth of inflation does not look convincing. Indeed, and we noted this earlier on the dynamics of yields of TIPs bonds, the growth of inflationary expectations stopped in May. Powell also noted the difficulties in determining the natural level of unemployment and interest rates, noted the absence of a risk of overheating the economy and expressed the view that the Fed should raise rates gradually to avoid mistakes.

On Thursday, data on the core inflation of the PCE for July will be published. In case the PCE index shows growth to 2.0%, the dollar will be able to return to the growth trajectory.

analytics5b839fb903d58.png

In general, it should be noted that the market's confidence that the Fed will raise the rate three times in 2019 has seriously shaken. There are almost no doubts about two increases in September and December, but for the next year the markets are firmly sure of only one increase. If these fears are confirmed on Thursday, the dollar's growth may end.

EUR / USD

The Euro looks stronger with the dollar after Powell's pigeon appearance. Today, it is possible to continue growing and try to reach the trend line at the level of 1.1680. On Friday, preliminary data on inflation in the eurozone for August will be published, in their expectation the demand for the euro will remain high.

GBP / USD

Today, banks in England and Wales are closed on the occasion of the holiday, so the volatility of the pound is expected to be low. The pound is most likely to spend the day in the trading range 1.2910 / 2880, given that the week will be poor for macroeconomic news, the direction of the exit from the range is still unclear.

Oil and ruble

Oil played a part of the losses on Powell's comments and a decrease in production in Iran, but further growth is still in doubt. During the day, a slight pullback is likely, for Brent the support is 74.90. The ruble has returned to the level of 67, the expansion of sanctions on its dynamics has no effect, but the Ministry of Finance's refusal to buy currency will help stabilize, it is likely that the USD / RUB will decline to 66.20 by the end of the day.

The material has been provided by InstaForex Company - www.instaforex.com

Fundamental Analysis of EUR/JPY for August 28, 2018

EUR/JPY has been impulsive and non-volatile with the recent bullish gains which led the price above 129.50 area with a daily close recently. On the back of the escalating trade war and Brexit tensions, EUR has been consistently dominating currency against JPY which is expected to lead to further upward momentum in the coming days.

Despite a mixed dynamic, EUR has been quite stable in light of recent economic reports which helped the currency to gain sustainable momentum over JPY while it was battered by sour reports. Today the eurozone's M3 Money Supply report was published with a decrease to 4.0% from the previous value of 4.4% which was expected to be at 4.3% and Private Loans was published with an increase as expected to 3.0% from the previous value of 2.9%.

On the JPY side, recent economic reports are mainly repsonsible for JPY delcine against EUR. As a result, EUR/JPY has been trading in the red. Today BOJ Core CPI report was published with an increase to 0.5% from the previous value of 0.4% which was expected to decrease to 0.3%. Despite the positive readings, JPY failed to gain momentum against EUR today that signals weakness of JPY compared to EUR for the time being.

Meanwhile, EURO has been trading with a mixed dynamic amid the economic reports published today, whereas positive reports from Japan did not help with the gains as expected. The impulsive bullish pressure of EURO has slackened that indicates that certain pullbacks and corrections may occur before EUR pushes the price higher against JPY in the coming days.

Now let us look at the technical view. The price is currently residing above 129.50 area from where it is expected to retrace towards 129.00-50 area before pushing higher towards 130.50 and later towards 132.00 area in the coming days. Though the price is currently quite bullish, the lower impulsive momentum is an indication of certain correction and retracement along the way before the price pushes higher in the coming days. As the price remains above 129.00 area, the bullish bias is expected to continue further.

SUPPORT: 129.00-50

RESISTANCE: 130.50, 132.00

BIAS: BULLISH

MOMENTUM: IMPULSIVE AND NON-VOLATILE

analytics5b852f126293b.png

The material has been provided by InstaForex Company - www.instaforex.com

BITCOIN Analysis for August 28, 2018

Bitcoin has been impulsive with the recent bullish gains above $6,500 area which has engulfed the previous indecisive and corrective price action. The price has recently bounced off the dynamic levels of 20 EMA and Tenkan Line. This move is expected to push the price higher towards the Kumo Cloud resistance, residing at $7,500 area. If the price manages to break above $7,500 with a daily close, further bullish momentum with a target towards $8,000 will go on. Meanhwile, the bullish bias is expected to continue as the price remains above $6,500 with a daily close. Further impulsive bullish pressure is likely to continue in the short term.

SUPPORT: 6,000, 6,500

RESISTANCE: 7,500, 8,000

BIAS: BULLISH

MOMENTUM: IMPULSIVE

analytics5b853155c51fb.png

The material has been provided by InstaForex Company - www.instaforex.com

NZD/USD Intraday technical levels and trading recommendations for August 28, 2018

analytics5b85296a52cdf.png

Bearish breakdown of 0.7220-0.7170 (lower limit of the consolidation range) allowed quick bearish decline towards 0.6700-0.6800 where narrow ranged consolidation range was established.

On July 7, evident bullish rejection pushed the NZD/USD pair above 0.6820 temporarily.

However, lack of bullish momentum made the bulls fail to maintain enough bullish momentum above 0.6700.

On August 9, a bearish breakout below the depicted consolidation range (0.6700-0.6840) was executed. This allowed the recent bearish decline to occur towards 0.6600-0.6570.

The NZD/USD pair outlook turned to be bearish. Bearish targets are projected towards the price levels of 0.6520 and 0.6480.

Recently, early signs of bullish recovery were manifested around the recent low around 0.6550. This allowed the current bullish pullback to occur.

Conservative traders should wait for deeper bullish pullback towards 0.6750 for a low-risk SELL entry. S/L should be placed above 0.6850 while T/P levels should be located at 0.6620 and 0.6550.

The material has been provided by InstaForex Company - www.instaforex.com

Fundamental Analysis of GBP/USD for August 28, 2018

GBP/USD has been quite volatile and indecisive recently which led the price to reside above 1.2850. This is expected to lead to further bullish momentum. Earlier, GBP has been dominated consistently by USD which is currently facing bullish pressures in the pair.

Recently while USD has been struggling on the back of sour economic reports, GBP has been quite stable and firm amid fundamentals which led to certain gains on the GBP side currently. This week on Thursday, the UK M4 Money Supply report is going to be published which is expected to increase to 0.2% from the previous value of -0.3%, Mortgage Approvals are expected to slightly decrease to 65k from the previous figure of 66k, and Net Lending to Individuals are expected to increase to 5.5B from the previous figure of 5.4B.

On the other hand, today US Goods Trade Balance report is going to be published which is expected to decrease to -68.6B from the previous figure of -67.9B, Prelim Wholesale Inventories report is expected to be unchanged at 0.1%, S&P/CS Composite-20 HPI report is expected to decrease to 6.4% from the previous value of 6.5%, and CB Consumer Confidence report is also expected to decrease to 126.6 from the previous figure of 127.4. Ahead of the Prelim GDP report which is due tomorrow with an expectation of a decrease to 4.0% from the previous value of 4.1%, USD is currently quite soft.

Meanwhile, GBP is currently quite optimistic ahead of the upcoming economic reports whereas USD is expected to struggle further amid downbeat forecasts for the upcoming economic reports. Though USD used to be the dominant currency, GBP is expected to regain its momentum if it manages to perform better or as expected.

Now let us look at the technical view. The price has been quite bullish with the recent momentum which led the price to reside above 1.2850 with a daily close. Though the dynamic level is still trying to hold the price lower which lead to certain indecision in the pair. As the price remains above 1.2850 with a daily close, it is expected to push higher with target towards 1.3050 and later towards 1.3200 area. On the other hand, if the price pushes back below 1.2850 again then the bearish trend pressure is expected to continue again with strong momentum with a target towards 1.2550 in the future.

SUPPORT: 1.2850, 1.2550

RESISTANCE: 1.3050, 1.3200

BIAS: BEARISH

MOMENTUM: VOLATILE

analytics5b852970a43ea.png

The material has been provided by InstaForex Company - www.instaforex.com

Intraday technical levels and trading recommendations for EUR/USD for August 28, 2018

In April 2018, the EUR/USD pair outlook turned to become bearish when the pair pursued trading below the lower limit of the depicted consolidation range (1.2200).

The price level of 1.1500 offered temporary bullish recovery towards 1.1830. The EUR/USD bulls failed to pursue towards higher bullish targets. Instead, a descending high was established around 1.1800.

On the weekly chart, the EUR/USD pair tested the price zone of 1.1400-1.1300 where the depicted trend lines were located on the chart.

On August 10, temporary bearish closure below 1.1400 was achieved. This allowed further bearish decline towards 1.1300 where evident bullish recovery was demonstrated.

This week, the current bullish pullback is persisting above 1.1520, the bearish scenario would be hindered for the short-term. Further bullish advancement should be expected towards 1.1750.

Conservative traders should be watching the next price zone (1.1750-1.1850) for evident bearish rejection and a valid SELL entry. Initial Bearish targets would be located at 1.1550 and 1.1420.

On the other hand, For the weekly Head & Shoulders reversal pattern to be confirmed, the EUR/USD pair needs obvious bearish persistence below 1.1400.

The material has been provided by InstaForex Company - www.instaforex.com

Bitcoin analysis for August 28, 2018

analytics5b851f395e769.png

Trading recommendations:

According to the H4 time - frame, I found a confirmed inverted head and shoulders pattern in the background, which is a sign taht buyers are in control. I also found a broken bullish flag pattern, which is another sign of strength. My advice is to watch for buying opportunities. The projected target is set at the price of $7.444.

Support/Resistance

$6.907 – Intraday resistance

$6.828– Intraday support

$7.444 – Objective target

With InstaForex you can earn on cryptocurrency's movements right now. Just open a deal in your MetaTrader4.

The material has been provided by InstaForex Company - www.instaforex.com

Analysis of Gold for August 28, 2018

analytics5b851b19240c9.png

Recently, Gold has been trading upwards. As I expected, the price tested the level of $1,213.25. According to the M30 time – frame, I found that buyers are in control and that price is trading above the daily pivot ($1,208.50), which is a sign that selling looks risky. I also found a rising channel and the price is trading near the median line. My advice is to watch for buying opportunities. The upward targets are set at the price of $1,217.65 and at the price of $1,223.10.

Resistance levels:

R1: $1,214.25

R2: $1,217.65

R3: $1,223.10

Support levels:

S1: $1,205.06

S2: $1,199.30

S3: $1,195.85

Trading recommendations for today: watch for potential buying opportunities.

The material has been provided by InstaForex Company - www.instaforex.com

Technical analysis of EUR/USD for August 28, 2018

analytics5b851487d7b44.png

Overview:

The EUR/USD pair will continue to rise from the level of 1.1612. The support is found at the level of 1.1612, which represents the 78.6% Fibonacci retracement level in the H1 time frame.

The price is likely to form a double bottom. Today, the major support is seen at 1.1612, while immediate resistance is seen at 1.1697. Accordingly, the EUR/USD pair is showing signs of strength following a breakout of a high at 1.1697. So, buy at the level of 1.1697 with the first target at 1.1782 in order to test the daily resistance 1 and move further to 1.1865.

Also, the level of 1.1865 is a good place to take profit because it will form a new double top. Amid the previous events, the pair is still in an uptrend; for that we expect the EUR/USD pair to climb from 1.1697 to 1.1865 today. At the same time, in case a reversal takes place and the EUR/USD pair breaks through the support level of 1.1612, a further decline to 1.1500 can occur, which would indicate a bearish market.

The material has been provided by InstaForex Company - www.instaforex.com

EUR/USD analysis for August 28, 2018

analytics5b8512bf1d673.png

Recently, the EUR/USD pair has been trading upwards. As I expected, the price tested the level of 1.1699. According to the M30 time – frame, I found that buyers are in control and that price is trading above the daily pivot (1.1654), which is a sign that selling looks risky. I also found a broken intraday bullish flag pattern and hidden bullish divergence on the stochastic oscillator, which is another sign of strength. My advice is to watch for buying opportunities. The upward targets are set at the price of 1.1715 and at the price of 1.1750.

Resistance levels:

R1: 1.1715

R2: 1.1750

R3: 1.1814

Support levels:

S1: 1.1615

S2: 1.1555

S3: 1.1517

Trading recommendations for today: watch for potential buying opportunities.

The material has been provided by InstaForex Company - www.instaforex.com

Technical analysis of USD/CHF for August 28, 2018

analytics5b85106d9d912.png

Overview:

Pivot: 0.9790.

The USD/CHF pair fell sharply from the level of 0.9815 towards 0.9764. Now, the price is set at 0.9770. The resistance is seen at the level of 0.9815 and 0.9847. Moreover, the price area of 0.9815/0.9847 remains a significant resistance zone.

Therefore, there is a possibility that the USD/CHF pair will move downside and the structure of a fall does not look corrective. The trend is still below the 100 EMA for that the bearish outlook remains the same as long as the 100 EMA is headed to the downside.

Thus, amid the previous events, the price is still moving between the levels of 0.9790 and 0.9719. If the USD/CHF pair fails to break through the pivot point level of 0.9790, the market will decline further to 0.9719 as as the first target.

This would suggest a bearish market because the RSI indicator is still in a negative spot and does not show any trend-reversal signs. The pair is expected to drop lower towards at least 0.9686 in order to test the daily support 3. On the contrary, if a breakout takes place at the resistance level of 0.9847, then this scenario may become invalidated.

The material has been provided by InstaForex Company - www.instaforex.com

Technical analysis of EUR/USD for August 28, 2018

EUR/USD has broken above the neckline resistance of the inverted Head and Shoulders pattern and above the 1.1660 resistance trend line. Short-term trend is bullish. There are some warning divergence signs in the 4-hour chart but they could justify only a pullback towards 1.16.

analytics5b84f311da4f7.png

Red line - resistance

Blue line - neckline

Black line - support

Red line RSI- Bearish divergence

The EUR/USD pair has broken through both resistance levels (trend line and neckline). The EUR/USD pair could be forming a bigger reversal pattern as we might have seen the end of the decline from 1.24. If this is the case, the next deep pullback in EUR/USD should not break below the 1.13 low and form a higher low. We could see a push through 1.17-1.1750 before a deeper pullback towards 1.16. So far we only have some warning signs in the 4-hour chart but only for a short-term top and a pause to this new upward move. I prefer to be a buyer on pullbacks towards 1.16 than chase bullish positions at 1.17.

The material has been provided by InstaForex Company - www.instaforex.com

Technical analysis of Gold for August 28, 2018

Gold price has formed a bullish flag pattern and shows signs of breaking upwards. The pullback towards $1,200 did not come as price only fell towards $1,203. Short-term trend is bullish and we expect Gold price to reach $1,220 over the coming days.

analytics5b84f21c1ea4f.png

Red line - support trend line

Blue lines - bull flag pattern

Green rectangle - major support and trend change level

Gold price is making higher highs and higher lows. Short-term trend is bullish as long as price is above the green rectangle area at $1,180-83. We also have support at $1,190. Resistance is at $1,228-35. We are bullish Gold as long as it stays above $1,200 as we could have made a major low in August at $1,159.

The material has been provided by InstaForex Company - www.instaforex.com

Trading plan for 28/08/2018

The green color dominates in the Asian markets and the US dollar is stronger in reaction to the bilateral trade agreement between the US and Mexico, which supported the risk appetite.

The US and Mexico have announced an agreement under NAFTA, opening the way to Canada for finalizing talks. USD / MXN fell to 18.60 for a moment, but the peso did not maintain its strength and the rate returned over 18.80. CAD also remains restrained and USD / CAD sits at 1.2970.The rest of the currency market remains under pressure from the strengthening USD, which is recovering from yesterday's weakening. EUR / USD stopped growth before 1.17 and returned to 1.1670. GBP / USD behaved similarly to 1.29. USD / JPY is up to 111.20.

On Monday, SP500 and Nasdaq closed on new records, sending a signal for increases for Asian stock exchanges. Japanese Nikkei225 grows to 0.3% and Chinese Shanghai Composite gains 0.1%.

Tuesday the 28th of August is another day is waiting for us without important macroeconomic information. During the European session, we will only get data from Switzerland on the level of employment in the second quarter. In the afternoon, the US consumer confidence index will be published. Wall Street can celebrate - during yesterday's session, the market finally managed to finish the correction lasting several months. The Chinese, in turn, worry about the prospect of falling investment.

DJIA analysis for 28/08/2018:

During the Monday US session, the Dow Jones Industrial Average completed a more than six-year correction - the longest since 1961, when the market could not break higher in 223 sessions. Yesterday's rise is largely due to the progress in trade negotiations. The USA and Mexico managed to reach an agreement after long talks, now Canada is waiting in line.

Let's now take a look at the Dow Jones technical picture at the daily time frame. DJIA closed yesterday with an increase of 1.01% at 26 049 points. The result above 25 886 points means the end of the adjustment lasting from February 8, when it fell by 10% from the record peak of 26 January - 26 067,57 points. The end of the correction is defined as an increase of 10% from the last hole. If an alternative definition is taken into account, ie the acquisition of a new historic summit, then to reach this ceiling, there is a shortage of fewer than 20 points.

analytics5b84ed543ce73.jpg

The material has been provided by InstaForex Company - www.instaforex.com

Bitcoin analysis for 28/08/2018

The Russian Ministry of the Interior is considering criminal liability for unregistered cryptographic operations. According to the documents acquired by Izvestia, the Ministry of Interior of Russia is working on the amendment of the law to legalize only registered operations of open source cryptocurrencies, such as Bitcoin, Ethereum and others. The Ministry suggests that in order to conduct legal transactions involving a crypto, persons or entities should acquire compulsory registration in state authorities that conduct financial and tax regulations.

The initiative apparently comes from the main directorate of the Ministry of Internal Affairs of Russia for Drug Control (GUKON). On July 13, the head of GUKON, Andrei Chrapov, asked the Russian Ministry of Finance to comment on the potential implementation and feasibility of the proposed legislative measures.

The Russian Ministry of Economic Development reportedly expressed a skeptical attitude towards the initiative of the Ministry of the Interior, claiming that it is still too early to consider the criminalization of cryptocurrency operations. Deputy Head of the Ministry of Economic Development, Savva Shipov, pointed out that so far there are no provisions specifically related to regulating cryptographic transactions. However, Shipov noted that individuals or entities could be prosecuted in cases where the cryptocurrency was used as a means of payment for already established illegal activities, such as trafficking in weapons or drugs.

Artem Tolkachev, a legal expert and CEO of Sputnik DLT, confirmed the position of the Ministry of Economic Development:"It is too early to talk about the criminalization of illegal [unregistered] cryptocurrency operations, as no necessary regulations have been established for this industry" - he writes.

Tolkachev also noted that while crypto trade takes place in the so-called the gray zone in Russia, and that many Russian authorities have been bringing similar initiatives since 2015, the idea of criminalizing cryptographic trade has not yet had any direct legal basis. In terms of the impact of such initiatives, the legal expert has suggested that Russian cryptographic projects will ultimately seek a different jurisdiction: "If such initiatives as the criminalization of cryptocurrencies gain in the future, it will have a negative impact on real projects, which, as a result, will look for another jurisdiction. In fact, large cryptographic operators no longer work in Russian structures, instead, they operate through foreign programs "- says Tolkachev.

The Ministry of Finance for the first time introduced the full legal framework for crypto and Blockchain in January 2018. The bill, entitled "On digital financial assets", was to be finalized by 1 July. So far, the draft law has been approved only in the first of three readings of the Russian parliament of the State Duma. Although the recently approved version of the law legalizes activities related to cryptography and initial monetary offers, it still directly states that digital financial assets are not a legal payment method in the territory of the Russian Federation.

Let's now take a look at the Bitcoin technical picture at the H4 time frame. The market has broken above the local high at the level of $6,873 and made a new local high at the level of $6,909. The next target for bulls is located at the level of $6,989 and the nearest techcnial support is seen at the level of $6,782. The corrective advance continues.

analytics5b84e6b91f564.jpg

The material has been provided by InstaForex Company - www.instaforex.com

Control zones: GOLD for 27.08.18

The upward movement continues to be a medium-term impulse. On Friday, favorable prices were obtained for the purchase of the second control zone at 1185.65-1184.10. The basic plan for the day is to hold a long position and find favorable prices for opening new deals.

There was a strong impulse on Friday, so the probability of updating the last week's high is 70%, which makes it possible to talk about reaching the target zone of 1/2 control zone at 1210.94-1209.39. Testing the specified zone will allow closing a part of purchases, and the rest to take out in breakeven. For those who do not have purchases, it is necessary to wait for the formation of a correctional model. The first support is the a control zone at 1200.33-1199.56. Testing the specified zone makes it is possible to open a position with a stop no more than 300 points. The main support is the a control zone 1192.58-1091.03. The test of this zone will be decisive and the upward movement remains an impulse while the pair is trading above it.

analytics5b83c84fe7760.png

The formation of a correctional model can take several days, so there is no need to rush shopping with current grades. Today's consolidation above the level of 1210.94 will indicate further growth in the medium term.

Friday's move was a strong impulse and it is too early to talk about the formation of a reversal downward model. Sales from current marks will not be profitable, as the probability of absorption of the last growth is 30%. A decline model is better used in finding purchase prices. The reversal model will develop if the closure of today's US session occurs below the a control zone at 1192.58-1091.03. This will cancel plans for gold growth in the next five days.

YbTmIOV1gXkgNavaTxeC6PMSk0N4Sh7wGZciu12b

The daytime CP is the daytime control zone. The zone formed by important data from the futures market that change several times a year.

The weekly CP is the weekly control zone. The zone formed by marks from important futures market which change several times a year.

The monthly CP is the monthly control zone. The zone is a reflection of the average volatility over the past year.

The material has been provided by InstaForex Company - www.instaforex.com

Powell did not contradict Trump

The euro rose on Friday afternoon and updated its weekly highs today during the Asian session, but then returned to large support levels in the absence of major players.

The speech of the Fed Chairman exerted pressure on the US dollar, as Powell did not criticize the recent statements of US President Donald Trump. Let me remind you that the US President stated at the beginning of last week that it is necessary to "slow down" the further increase of interest rates since the competitiveness of the US dollar against other currencies is significantly reduced.

Speaking at a conference in Jackson Hole, Powell said that there is a good reason to expect that the US economy will continue to remain strong, and therefore, a gradual process of normalization remains appropriate. Powell also noted that, despite this, economic activity in the US declined, and productivity should grow faster yo have a significant increase in revenue.

The Fed Chairman drew attention to the fact that estimates by the committee of natural unemployment and a neutral level of interest rates are not accurate.

As for inflation, Powell is confident that fixing inflationary expectations is vital for the Fed, and the committee will do whatever it takes if inflation becomes a threat.

Pressure on the US dollar resumed after Powell said he did not see an increased risk of overheating the economy, and further gradual tightening of the policy would remain appropriate only after the strong growth of incomes and employment continued.

analytics5b83a69761ad5.png

Speeches of other Federal Reserve representatives moved into the background and did not have an impact on the markets.

For example, the president of the Federal Reserve Bank of Cleveland, Loretta Mester, said that a steady growth in interest rates in the United States. In her opinion, the Fed has strong arguments in favor of tightening monetary and credit policy. Last week, a number of managers from the reserve banks, advocated the further increase in interest rates and approaching the neutral level.

As for the technical picture of the EUR/USD pair, buyers need a breakthrough of a large resistance of 1.1630 to resume growth. Only from there, demand for risky assets will resume again, which will lead to the preservation of the current uptrend with the update of the highs of 1.1700 and 1.1745.

The material has been provided by InstaForex Company - www.instaforex.com

USD/CAD Testing Support, Prepare For Bounce

USD/CAD is testing its support at 1.2960 (61.8% Fibonacci extension, 61.8%, 50%, 38.2% Fibonacci retracement, horizontal swing low support) where the price is expected to bounce up to its resistance at 1.3086 (61.8% Fibonacci retracement, horizontal swing high resistance).

Stochastic (55, 5, 3) is testing its support at 3.7% where a corresponding bounce is expected.

USD/CAD is testing its support where we expect to see a bounce.

Buy above 1.2960. Stop loss at 1.2878. Take profit at 1.3086.

.

.

.

.

#theforexarmy #forexsigns #forexsignals #forexfamily #forexgroup #forexhelp #forexcourse #forextrade #forexdaily #forexmoney #forexentourage #forextrading #forex #forexhelptrading #forexscalping #babypips #forexfactory #forexlife #forextrader #financialfreedom #daytrader #scalper #swingtrader #fx #currency #pips #technicalanalysis #forexmarket

The material has been provided by InstaForex Company - www.instaforex.com

EUR/GBP Approaching Resistance, Prepare For Reversal

EUR/GBP is approaching its resistance at 0.9071 (100% Fibonacci extension, 61.8% Fibonacci retexpected.racement, horizontal swing high resistance) where it is expected to reverse down to its support at 0.8992 (61.8% Fibonacci extension, 50% Fibonacci retracement, horizontal overlap support). Stochastic (89, 5, 3) is approaching its resistance at 97% where a corresponding reversal is expected.

EUR/GBP is approaching its resistance where we expect to see a reversal.

Sell below 0.9071. Stop loss at 0.9102. Take profit at 0.8992.

.

.

.

.

#theforexarmy #forexsigns #forexsignals #forexfamily #forexgroup #forexhelp #forexcourse #forextrade #forexdaily #forexmoney #forexentourage #forextrading #forex #forexhelptrading #forexscalping #babypips #forexfactory #forexlife #forextrader #financialfreedom #daytrader #scalper #swingtrader #fx #currency #pips #technicalanalysis #forexmarket

The material has been provided by InstaForex Company - www.instaforex.com

Technical analysis: Intraday Level For EUR/USD, Aug 28, 2018

analytics5b84d222d263c.jpg

When the European market opens, some Economic Data will be released such as Private Loans y/y, and M3 Money Supply y/y. The US will release the Economic Data too such as Richmond Manufacturing Index, CB Consumer Confidence, S&P/CS Composite-20 HPI y/y, Prelim Wholesale Inventories m/m, and Goods Trade Balance, so amid the reports, EUR/USD will move in a low to medium volatility during this day.

TODAY'S TECHNICAL LEVEL: Breakout BUY Level: 1.1739. Strong Resistance:1.1732. Original Resistance: 1.1721. Inner Sell Area: 1.1710. Target Inner Area: 1.1682. Inner Buy Area: 1.1654. Original Support: 1.1643. Strong Support: 1.1632. Breakout SELL Level: 1.1625.

Disclaimer: Trading Forex (foreign exchange) on margin carries a highlevel of risk, and may not be suitable for all Traders or Investors.The high degree of leverage can work against you as well as for you.Before deciding to invest in foreign exchange you should carefullyconsider your investment objectives, level of experience, and riskappetite. The possibility exists that you could sustain a loss of someor all of your initial investment and therefore you should not investmoney that you cannot afford to lose. You should be aware of all therisks associated with foreign exchange trading, and seek advice froman independent financial advisor if you have any doubts.

The material has been provided by InstaForex Company - www.instaforex.com

Technical analysis: Intraday level for USD/JPY, Aug 28, 2018

analytics5b84d17a72ee2.jpg

In Asia, Japan will release the BOJ Core CPI y/y and the US will release some Economic Data such as Richmond Manufacturing Index, CB Consumer Confidence, S&P/CS Composite-20 HPI y/y, Prelim Wholesale Inventories m/m, and Goods Trade Balance. So there is a probability the USD/JPY pair will move with low to medium volatility during this day.

TODAY'S TECHNICAL LEVEL: Resistance. 3: 111.82. Resistance. 2: 111.60. Resistance. 1: 111.38. Support. 1: 111.11. Support. 2: 110.89. Support. 3: 110.68.

Disclaimer: Trading Forex (foreign exchange) on margin carries a highlevel of risk, and may not be suitable for all Traders or Investors.The high degree of leverage can work against you as well as for you.Before deciding to invest in foreign exchange you should carefullyconsider your investment objectives, level of experience, and riskappetite. The possibility exists that you could sustain a loss of someor all of your initial investment and therefore you should not investmoney that you cannot afford to lose. You should be aware of all therisks associated with foreign exchange trading, and seek advice froman independent financial advisor if you have any doubts.

The material has been provided by InstaForex Company - www.instaforex.com

Elliott wave analysis of EUR/NZD for August 28, 2018

analytics5b84c05bc70f4.png

We still need a clear break above short-term important resistance at 1.7484 to open up the upside for a rally towards 1.7821 and beyond.

Short-term support is seen at 1.7352 which ideally will protect the downside for the expected test and possible break above resistance at 1.7484 for a continuation higher. If however, support at 1.7352 is broken, that will extend the correction in red wave ii and likely call for a retest of 1.7266 before turning higher again.

R3: 1.7668

R2: 1.7578

R1: 1.7484

Pivot: 1.7416

S1: 1.7425

S2: 1.7352

S3: 1.7339

Trading recommendation:

We are long EUR from 1.7330 and we will raise our stop to break-even.

The material has been provided by InstaForex Company - www.instaforex.com

Elliott wave analysis of EUR/JPY for August 28, 2018

analytics5b84be6b58d98.png

The correction turned out much smaller thane expected and was likely only a red sub-wave iv correction and not the start of the correction in black wave ii/ as we where looking for. This means the rally of red wave iv is red wave v and the ideal target for this wave is seen at 130.38, where the red wave v will be equal in length to the red wave i. Once the impulsive rally from 124.89 finds its peak, a correction to at least 127.64 should be expected.

In the short-term, a break below minor support at 129.58 will indicate that the black wave i/ has completed and the black wave ii/ is developing.

R3: 130.60

R2: 130.38

R1: 129.95

Pivot: 129.58

S1: 129.21

S2: 128.78

S3: 128.42

Trading recommendation:

Our stop at 129.80 was hit for a 50 pips loss. We will resell EUR at 130.35 or upon a break below 129.58 with a stop placed at 131.35.

The material has been provided by InstaForex Company - www.instaforex.com

Analysis of EUR/USD Divergences on August 27. It is brewing a coup upside down

4h

analytics5b839af2ae58f.png

According to the 4-hour chart, the EUR/USD pair had reversed in favor of the European currency and closed above the 61.8% Fibo level to 1.1603, after the bullish divergence of the CCI indicator. As a result, the growth process can be continued on August 27 towards the next correction level of 76.4% - 1.1675. Today, the bearish divergence of the MACD indicator is maturing. Its formation will allow us to consider reversal in favor of the US dollar and a slight decline towards the corrective level of 50.0% - 1.1546. The rebound of quotes from the 76.4% Fibo level will similarly work in favor of the US currency.

The Fibo grid is established on the extremes from July 9, 2018 and August 15, 2018.

Daily

analytics5b839afb9709f.png

On the 24-hour chart, the pair completed a new fixation above the correction level of 100.0% - 1.1553. Thus, the growth of quotations can be continued towards the correctional level of 76.4% - 1.1789. Brewing divergences today is not noticeable in any indicator. The consolidation of the pair's rate below the Fibo level of 100.0% can be interpreted as a reversal in favor of the US currency and expect a slight decline towards the correction level of 127.2% to 1.1285.

The Fibo grid is established on the extremes from November 7, 2017 and February 16, 2018.

Recommendations for traders:

Purchases of the EUR/USD pair can now be carried out with the target at 1.1675, and a stop loss order below the Fibo level of 61.8%, as the pair completed the closing above the correction level 1.1603, and hold them until a bearish divergence forms.

Selling the EUR/USD pair will be possible with the target at 1.1546, if the pair completes the closing at the Fibo level of 61.8% or a bearish divergence is formed with a Stop Loss order above the level of 1.1603.

* The presented market analysis is informative and does not constitute a guide to the transaction.

The material has been provided by InstaForex Company - www.instaforex.com

The dollar declined, but it did not last long

The speech of Fed Chair J. Powell at the economic symposium in Jackson Hole, Wyoming, confirmed that the selected course was during the period of J. Yellen to gradually increase interest rates.

The head of the Central Bank was optimistic about the prospects for further growth of the country's economy, pointing out that "he does not see signals of accelerating inflation much higher than the 2.0% target, as well as the risks of overheating of the US economy." Investors took his words optimistically, despite the fact the continuation of the cycle of raising interest rates in general. It seems that market participants believe that the process of a smooth increase in interest rates gives them the opportunity to "have time" to buy risky assets, making a profit until the moment when rates reach absolute neutral values, which can already be perceived as a signal for large-scale profit-taking.

Investors completely switched to Powell's speech, ignoring the failure of the negotiations between the US and China on customs duties. On other hand, this can be explained by the fact that, very few people in general hoped that they would be positive, and on the other is their influence is already taken into account in market sentiments and quotations. Although Friday was positive, we consider it a temporary phenomenon. Markets will pay attention again to trade wars, and probably, this will push up the US dollar rate again. But at the same time we pay attention to the fact that, the overall lateral dynamics of the dollar paired with major currencies will most likely continue in the short term.

The dollar will be bought for a number of reasons. The first and foremost process is the method of capital transfer to the States from emerging markets and from Europe, where the likelihood of a large-scale financial crisis that raged in Turkey has increased significantly, putting European banks at high risk and investing considerable capital in the country's economy. The next problem is Italy, which can get into the debt "bag" on the background of high public debt. The dollar will also receive support in the wake of the trade war between Washington and Beijing as a currency refuge. And, of course, the Fed's position to smoothly continue, as the process of raising interest rates will be a good incentive for its purchases.

Forecast of the day:

After reaching the local maximum on Friday on the wave of J. Powell's speech, the EUR/USD pair may turn down again if it hover below the 1.1620 level. Against this background, it can adjust to 1.1535 after overcoming the 1.1600 mark.

The AUD/USD pair is trading above the 0.7315 mark. It may continue to adjust down to 0.7255 after overcoming this level. The reason is still the continuing tension between the US and China on customs duties.

analytics5b839a7e7d772.png

analytics5b839a903404e.png

* The presented market analysis is informative and does not constitute a guide to the transaction.

The material has been provided by InstaForex Company - www.instaforex.com

"The Powell Effect": the head of the Federal Reserve could not support the dollar

The market was eagerly waiting for Friday's speech by Fed Chairman Jerome Powell in the light of Donald Trump's recent statements about the actions of the American regulator.

The main intrigue of this speech was not even in assessing the prospects of monetary policy, but in response to the attacks of the US President. Experts disagreed about the possible behavior of Powell, although most analysts were inclined to believe that he would simply ignore this fact.

analytics5b841c0c59c2e.jpg

This assumption was confirmed: the head of the Federal Reserve did not comment on the critical statements of Trump, speaking in his usual way. Although it is worth acknowledging that Powell's rhetoric has softened somewhat: whether this fact is just a coincidence or an objective reflection of reality is an open question. But the market interpreted his speech in its own way, increasing pressure on the US currency. Today, after a few thoughts during the European session, the greenback continued to decline: the dollar index returned to 94 points - for the first time in the last three weeks.

The position of Powell only partly explains the fall of the dollar, especially since the head of the Fed as a whole has retained its "general line": he assured the markets that the regulator will continue to gradually increase the interest rate against the backdrop of the strengthening of the US economy. Such a positive attitude was leveled by two phrases, on which traders focused their attention.

First, Powell said that at the moment he does not see clear signs of growth of inflation above the target level. Secondly, he said that the Fed does not see signs of an "overheating" of the economy. Such remarks are "dovish" in nature, since in the future they can serve as arguments for a slower pace of the rate hike.

Now the market differently assesses the chances of a rate hike in December and March (the September increase is not even discussed, the market is almost 100% sure of this step). Therefore, if such thoughts of the "dovish" nature will prevail among the members of the central bank, the Fed may postpone the December rate hike to the beginning of 2019, therefore, the March increase - to a more distant date. And do not forget that the Fed is slowly but surely going to the level of a neutral rate (although where exactly is the "natural" interest rate is still a subject of discussion). As the head of the Federal Reserve Bank of Dallas Robert Kaplan recently announced, the regulator will raise the rate three or four times (0.25%) before taking a long pause. In other words, in his opinion, the level of the neutral rate is 2.5-2.75%, whereas previously the regulator members voiced a target of "about 3%".

After Friday's speech by Powell, there were speculations in the market that the Fed could make longer pauses between the rate hikes, and the level of the neutral rate "approach" to 2.5%. According to some experts, this scenario might be optimal for both the White house and the Fed. After all, the regulator needs to maneuver between two extremes: on the one hand, to prevent the "overheating" of the economy by a too slow a rate hike, on the other hand – not to "strangle" the growth of the economy by tightening the terms of monetary policy. The above scenario with such "inputs" is very optimal. At least, this was more often said among currency strategists.

Naturally, such an option was negatively perceived by dollar bulls, which, after the release of the latest data on US GDP growth, laid a more "hawkish" scenario: two more increases this year, and three - in the next. Therefore, the notes of indecision Powell made such an impressive effect.

By and large, the head of the Fed did not change the course of monetary policy, but prepared a kind of springboard for slowing the pace of rate hikes in the future. In light of Trump's recent statements, such conclusions look quite plausible, especially if the growth rate of the US economy in the third quarter slows down. By the way, the second estimate of GDP growth for the 2nd quarter will be published on Wednesday: according to preliminary data, the indicator will be revised downwards, albeit slightly (up to 4% from 4.1%). But if the indicator is worse than the forecast values, the dollar will be under additional pressure.

However, not only the rhetoric of Powell puts pressure on the US currency. The dollar has ceased to enjoy active demand as a "safe haven" against the background of a certain geopolitical detente. Washington agreed with Mexico city on the fate of NAFTA, the first round of US-China trade negotiations ended with "cautious optimism", and the Turkish Lira suspended its decline. And although these fundamental factors are weak enough to put pressure on the dollar, in their totality they have achieved a certain effect.

analytics5b841bfc0cd5f.jpg

Speaking directly about the euro/dollar pair, the present release (the only more or less significant for the whole day) was an additional impulse for an upward movement. This is an indicator of the business environment in Germany from IFO. This indicator is of secondary importance for the currency market, but in the absence of other news, it influenced the dynamics of the pair. Moreover, the figure jumped immediately to 103.8 points – this is the best result since February this year. This picture gave strength to the European currency, after which the bulls of the EUR/USD seized the initiative (although in the morning the pair "dipped" in the framework of the 15th figure).

analytics5b841be8a73fc.jpg

The upward impulse allowed it to break through the lower boundary of the Kumo cloud on the daily chart (1.1655) and to designate the following target: 1.1750 (the upper boundary of the Kumo cloud, which coincides with the upper line of the Bollinger Bands indicator). If the price is fixed above this target, the Ichimoku Kinko Hyo indicator will form a bullish signal "Parade of lines", and then the pair can reach the area of 19-20 figures. But while the price is trading below this level, it is too early to talk about it.

The material has been provided by InstaForex Company - www.instaforex.com

Weekly review of the foreign exchange market from 27.08.2018

The penultimate week of summer was accompanied by a weakening of the dollar, although the content of the text of the minutes of the meeting of the Federal Commission on Open Market Operations was rather positive. In fact, the content of the text of the minutes removed all doubts about the fact that the Fed will raise the refinancing rate twice before the end of the year. However, this did not produce the desired effect, since such a scenario has long been embedded in the value of the dollar. The dollar made a serious attempt to grow during the first day of the annual meeting in Jackson hole, when one of the representatives of the Federal Open Market Committee said that the rate of increase in the refinancing rate will be maintained next year. But all the optimism evaporated the next day, when the head of the Fed said that the question of the rate of increase in the refinancing rate next year will be considered on the basis of macroeconomic dynamics. Taking into account that these very macroeconomic indicators show increasing signs that the US economy is slowing for a few months already, there are big doubts about the Fed's action next year, which did not allow the dollar to develop its success, and even led to its weakening. And although the content of the text of the minutes of the meeting of the ECB's board on monetary policy did not give an unambiguous answer about the further fate of the quantitative easing program, which means the continuing probability of its next board, the dollar could not take advantage of this. The reason lies in the fact that, despite assurances from ECB representatives, investors take into account this probability of the development of events. Yes, and Donald Trump added fuel to the fire on the eve of the start of negotiations between the US and China on trade issues, writing on his Twitter that he does not expect any progress from them. This means that the US intends to negotiate only on favorable terms, but they have no opportunity to impose their will. Namely, this is the main problem for the dollar.

If you look at the macroeconomic data, it only once again confirms that the dollar had nothing to grow. Home sales in the secondary market fell by 0.7%, and they have been declining for six months in a row. For the second consecutive month, sales of new homes are also declining, this time by 1.7%. After a brief growth, within just one month, orders for durable goods also resumed their decline, falling by 1.7% at once. Preliminary data on business activity indices were also very weak. Thus, the index of business activity in the service sector decreased from 56.0 to 55.2, and the production index from 55.3 to 54.5. So the composite index of business activity fell from 55.7 to 55.0. The only thing that could please investors is the data on applications for unemployment benefits, the total number of which, instead of increasing by 5 thousand, decreased by 4 thousand. And the number of both initial applications and repeated ones decreased. But compared to all other data this is clearly not enough.

In Europe, there was very little data, but they were clearly more optimistic. In particular, the growth rate of the construction industry accelerated from 2.0% to 2.6%. Preliminary data on business activity indices were much better than in the United States. Thus, the index of business activity in the service sector increased from 54.2 to 54.4, which offset the decline in the production index from 55.1 to 54.6. As a result, the composite index of business activity rose from 54.3 to 54.4. This, of course, is slightly worse than the forecasts, as we expected the growth of the composite index of business activity to 54.5, but this was due to a much larger than expected reduction in the production index.

This week there is very little data already in the US, and forecasts for them are rather negative. Another assessment of the GDP growth rate for the second quarter should show weaker results than the previous one. Of course, the pace of economic growth is accelerating, but not as much as previously expected, so investors can revise their long-term plans. Also, against the background of the continuing decline in housing sales, a further decline in unfinished housing sales transactions is expected. This time they should be reduced by 6.0%, and this will be the second consecutive decline. Also, this does not foretell a rapid growth in housing sales, so the picture looks quite sad. The only thing that can inspire optimism is data on personal income and expenses, as expenses should grow stronger than income, and this gives hope that consumer activity will grow.

In Europe, the forecasts are more optimistic, as the growth rate of consumer lending should accelerate from 2.9% to 3.0%, and unemployment could fall from 8.3% to 8.2%. Preliminary data on inflation may alert investors, as it is expected that it will remain unchanged. This development retains the possibility of a further extension of the quantitative easing programme. But the single European currency will receive support from the German Foreign Ministry. The fact is that the German foreign minister said that he will soon present a foreign policy strategy towards the United States. Heiko Maas, commenting on his statement, said that Europe should take on the role of a counterweight to the United States, and that the European Union should become a pillar for the international order. Such statements once again demonstrate that the US is losing its influence and is no longer able to impose its will, even on its allies. But a more active position of Germany can increase interest in the single European currency. Thus, there is a high probability that by the end of the week the single European currency will grow to 1.1675.

analytics5b83afae0c2db.png

According to the UK, or rather its macroeconomic statistics, the forecasts are not so comforting. The net volume of consumer lending should decrease from 5.4 billion pounds to 5.2 billion pounds, and the number of approved mortgage applications may be reduced from 65,619 to 65,500. And the foreign policy position of Germany will have little impact on the UK, at least for the first time. So the pound will be supported by extremely weak statistics in the US, so there is a high probability of its consolidation at 1.2825.

analytics5b83afbb8a7f0.png

The material has been provided by InstaForex Company - www.instaforex.com

USD/CAD: Loonie waiting for important news

The empty economic calendar of Monday forces traders to focus on near-market events and external fundamental background. After a tumultuous five days of trading, we expect a relatively boring week, if we consider only the list of expected macroeconomic releases.

However, this does not mean that there will be silence and low volatility in the market: on the eve of the autumn season, many processes of economic and political nature are activated. This is brexit, and discussion of new anti-Russian sanctions, and U.S.-China negotiations. But today we will talk about another process that lasts for the second year: we are talking about negotiations on the renegotiation of the North American Free Trade Agreement (NAFTA).

In June, US President Donald Trump has again threatened to unilaterally withdraw from this agreement at the same time proposing to split this transaction into two separate parts: the U.S.-Canada and U.S.-Mexico. However, Mexicans, and especially Canadians, categorically rejected the proposal. The fate of NAFTA was again in limbo with uncertain prospects. And if earlier the parties planned to renegotiate the deal before the Mexican presidential elections (which took place in July), now there are no temporary guidelines: the negotiations can last indefinitely, or until one of the participants (most likely the US) has no patience.

analytics5b83aed686c75.jpg

The situation has moved forward from a dead point after the opponent of the current head of state, Andres Obrador, unexpectedly won the elections in Mexico. He immediately developed a very warm relationship with Trump, which affected the negotiation process. Although Obrador promised to keep the deal with the three participants, the talks resumed in a bilateral format-without Canada. Rumors began circulating in the market that Mexico was preparing a separate agreement with Washington, after which the Canadian dollar was under considerable pressure. But, according to the Mexicans, the parties only want to settle all the controversial issues, and then return to the trilateral format.

And today, on August 27, we can learn the results of bilateral talks between Mexico and the United States. Donald Trump on Twitter announced a "major trade agreement" between the countries, adding that relations between Mexico city and Washington "are improving by the hour." Here it is worth recalling that the US president mentions Canada exclusively in a negative way, especially after the G-7 meeting.

According to the information of the American press, Washington will announce today that an agreement has been reached with Mexico on NAFTA. According to sources of journalists, this step should have been done last week, but the parties needed more time to resolve the latest issues. According to the same insiders, the agreement will allow Canadians to join the further negotiation process.

With a high degree of probability, we can assume that the Canadian dollar will respond positively to this step - at least, if we talk about the initial reaction. Then everything will depend on the comments of the Canadian side. If Ottawa is skeptical about the prospects for the re-conclusion of the NAFTA, then all the optimism will come to naught, but if the parties start trilateral negotiations (which is more likely), the Canadian dollar will receive an additional reason for its growth.

The fact that NAFTA - one of the few "anchors", which to some extent restrains the acceleration of the pace of tightening monetary policy in Canada. While other factors play in favor of further rate increases. In particular, the July inflation in Canada showed the strongest result since autumn of 2011. The labor market also shows a strengthening: the unemployment rate has dropped to 5.8%, and the number of employees increased by almost 55 thousand. Both indicators exceeded the forecast values, confirming the positive dynamics. The oil market is also showing signs of recovery – today a barrel of Brent crude oil is traded in the region of $76, and WTI - at $68.

Thus, the NAFTA Agreement is an important component for the growth of the Canadian currency in the medium and long term. If today this issue moves from the "dead point", the reaction of the USD/CAD traders will be appropriate.

analytics5b83aec92728a.jpg

From the technical point of view, the pair is still in the downward movement. On the daily chart, the price is located between the middle and lower lines of the Bollinger Bands indicator and under all lines of the Ichimoku Kinko Hyo indicator, which formed a bearish signal "Parade of lines". This suggests that in the medium term the price may fall to the lower line of Bollinger Bands, which corresponds to the level of 1.2950. But for this bears need to overcome the intermediate barrier-1.3000. If the news background regarding the prospects of NAFTA will be positive, the above-mentioned goals can be achieved in the coming days.

The material has been provided by InstaForex Company - www.instaforex.com